Reliance challenges Vodafone

According to a report in the FT Reliance is seeking help from VCs to acquire Essar itself. The move could well raise problems with India's own regulatory bodies.

Quite sensibly, Hutchison Essar is a GSM based operator which should help Vodafone to capitalise on its purchasing power with both handset and infrastructure vendors.

This contrasts sharply with the USA where Vodafone is stuck with a minority share in a cdmaOne based operator, Verizon Wireless.

Vodafone has confirmed it interest in Hutchison Essar. The irony here is that Essar's parent is Hutchison Telecommunications which is part of the same group, Hutchison Whampoa, which own the 3 network in the UK.

So if Vodafone really does pay around £14 billion for Essar as predicted, perhaps Hutchison won't have to sell 3 UK after all.

More likely, Vodafone's shareholders may baulk at handing over large amounts of wonga to Hutchison twice. So it may be forced to leave 3 UK to its arch rivals. µ